The Inland Revenue is using internet trading sites such as e-Bay as a new hunting ground for tax defaulters, according to tax specialists at Grant Thornton.

According to Gary Ashford, senior manager in the firm's tax investigations team in Birmingham, internet trading is firmly under the Revenue spotlight for its potential to net millions in unpaid taxes.

He said: "When you sell goods regularly with a view to making a profit this might well constitute a trade and any profits should be declared to the Inland Revenue and perhaps also to Customs & Excise.

"Some people may already have set up bona-fide companies, but for those who haven't, they should be aware of this new level of scrutiny on internet trading.

"The Revenue is always looking at new ways to collect tax and, given the amount of publicity on the levels of profit being made by some, it's hardly surprising that its attention has been alerted.

Individuals who sell the odd unwanted gift, sports equipment or unused DIY tools need not be concerned, but regular, heavy-duty trading traffic will certainly be targeted.

" Using its risk based approach, the Revenue builds up a mass of information on individuals and the first they might know about this is the receipt of a letter warning them that they might face an enquiry. If anyone has concerns about these matters they should contact a tax specialist."